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Ever since governments disappointed the world in Copenhagen at the end of 2009 by not producing a global agreement that would mandate reductions of carbon emissions, there has been a mood of despair about addressing the challenges posed by global warming. The intense lobbying efforts by climate deniers reinforced in the United States by a right wing anti-government tsunami that has paralyzed Congress even in relation to modest market-based steps to induce energy efficiency is part of the bleak picture. It raises daunting biopolitical questions about whether the human species has a sufficient will to survive given the nature of the climate change challenge. Less apocalyptically, it makes us wonder whether a state-centric structure of world order can surmount the limits of national interests to undertake policies that promote the human interest.

International experience shows that where the interests of important states converge, especially if complemented by the interests of business and finance, collective initiatives upholding human interests can be implemented. The international regulation of ozone depletion, the public order of the oceans, the avoidance of international conflict in Antarctica, and the protection of some endangered marine species, such as whales, are illustrative of what is possible when the lawmaking and compliance atmosphere is supportive. This record of regulation on behalf of the global common good are examples of success stories that make international law seem more worthwhile than media cynics and influential political realists acknowledge. Yet in relation to the climate change agenda, despite a strong consensus among climate scientists (at about the 97% level), the dynamics of forging the sort of agreement that will keep global warming within prudent and manageable limits has not materialized. Such a world order failure imposes serious costs. As has been repeatedly demonstrated, the longer the buildup of greenhouse gasses is allowed to persist, the worse will be the harmful effects on human wellbeing and the greater the costs of preventing still worse future impacts taking the form of rising sea levels, drought and floods, extreme weather, melting polar regions, and crop failures. At some point thresholds of irreversibility are crossed, and the fate of the human species, along with that of most of nature, becomes sealed.

There are many factors that have contributed to this policy stalemate. Among the most serious is the decline of responsible American leadership. Ever since the Copenhagen fiasco American leverage has been used irresponsibly, to discourage climate change ambition in the negotiations and to oppose any new effort to impose obligations on governments. In an atmosphere where adverse national interests and perceptions were difficult enough to overcome, the United States in effect insisted that constraining their pursuit was not politically feasible or desirable. Stymied by a political atmosphere in Washington that is hostile to international commitments of any kind, but especially to those that concern environmental protection and impose constraints on market activities. In this kind of situation, if rich and powerful America refuses to take a responsible position, it cannot effectively encourage others to do so, and without geopolitical leadership, selfishly conceived national interests with short time horizons, carry the day.

President Barack Obama has been making the urgency of action on climate change a rallying cry of his second term. In June of this year he gave a commencement address at the Irvine campus of the University of California in which he urged the graduating students to demand more responsible action on climate change from the government, especially Congress, as crucial in seeking a hopeful future for themselves. The assembled students and their families received such a message with enthusiastic applause, but there is little reason to be hopeful that Obama is able to turn the tide in Washington sufficiently to restore confidence in American leadership with respect to climate change. The issue is crucial as the world is gearing up for a 2015 global meeting of governments in Paris that may represent the last real opportunity for collective action on a global scale to slow down the march toward species oblivion in an overheating planet, perhaps a moment of truth as to whether the coordinated behavior of governments is capable of serving the planetary public good in relation to climate change. According to ‘Giddens Law’ by the time the public awakens to the seriousness of the emergency it will be too late to reverse, or even manage, the warming trend. Obama at Irvine put this same issue more conditionally: “The question is whether we have the will to act before it is too late.” The issue is further clouded as there is no way of knowing in advance what is ‘too late.’

Despite this recital of discouraging aspects of the national and global response to climate change, I believe for the first time in this century that there may be reasons to be guardedly hopeful, maybe not in relation to what will emerge in Paris, but with respect to a tectonic shift in how the climate change challenge is being understood by the public and by hegemonic elites, especially in the globalizing domains of high finance and transnational corporate operations. Publication of the report in June 2014, Risky Business, is certainly a weathervane of change in the political atmospherics relating to climate change. The visual iconographic adopted by the report is a damaged roller coaster inundated by rising coastal waters, that is, the destruction of commercial property by disregard of the longer term impacts attributable to global warming.

This report explains and analyzes impending economic burdens on American business interests associated with sustained inaction on climate change. It is a think tank offering based on empirical research and risk analysis methodology that comes with the imprimatur of a self-anointed group of high-level economistic figures with impeccable private sector credentials. The chairs of this blue ribbon American effort were Henry Paulson, Secretary of the Treasury under Bush during the deep recession, Michael Bloomberg, former Mayor of New York City and environmentally oriented billionaire, and Thomas Steger, a prominent former hedge fund manager, identified as a major donor of the Democratic Party. Among the ten notables, an establishment mix of conservative and mainstream heavyweights, whose role seems to be to lend legitimacy and visibility to the report and its assessments. Two of the ten are former secretaries of the treasury (George Shultz, Robert Rubin), several business leaders connected with big corporations, including Gregory Page the CEO of Cargill, the worldwide agribusiness giant, three have held prominent political posts in the past, and there is even one lonely academic. In keeping with the national focus of the undertaking, the global dimensions of climate change are completely ignored, and all of the endorsers are American.

In his Irvine commencement address Obama quotes approvingly Woodrow Wilson’s remark: “Sometimes people call me an idealist. Well, that is the way I know I am an American.” Obama adds his own emphatic endorsement: “That’s who we are.” In contrast, the tone and rationale of Risky Business is not idealist, but what one might call ‘sensible’ and ‘prudent.’ Not so much doing what is right for the country as doing what is beneficial for the the future of the American economy, and helping to realize the central goal of business–maximize benefits from the efficient use of capital. The report is also realistic in the sense of doing its best to avoid being ‘political’ or stepping on ideologically sensitive toes.

In this spirit Risky Business self-consciously refrains from offering policy recommendations, presumably to avoid seeming partisan or pushing ideologically sensitive buttons. There is a claim made by the authors that the analysis is meta-political (quite a political novelty these days) because its recommended approach should appeal to anyone concerned with the future of the American economy. As indicated, the report somewhat artificially looks at climate change exclusively through a national lens. It refrains from any direct commentary on the global aspects of the climate change challenge and even fails to offer any insight as what should be done internationally to lessen adverse national economic impacts associated with the global mismanagement of climate change. The modestly framed objective of this report is to stimulate active participation by business representatives in debates about how to mitigate harmful climate trends. Paulson (of bailout notoriety) wrote a widely influential article publicized with an unexpectedly alarmist headline, “The Coming Climate Crash,” (NY Times, June 21, 2014) that effectively publicized the outlook of Risky Business, proposing a new attitude toward climate advocacy likely to exert a major influence in both the investment community, Washington’s think tanks and lobbyists, and hence, eventually, even Congress. The main messages being delivered are that human-generated global warming is real and dangerous for the economy (and incidentally for human health), and that inaction and delay in attending the risks will make the situation worse than it already is and much more expensive to control. The bottom line is that business and finance stakeholders should immediately enter the national policy debate as a matter of self-interest. If sufficiently heeded, such involvement is likely to change the balance of forces on Wall Street and Washington, the two venues that count most in this country when it comes to the shaping of the government role in the economy.

Risky Business, in keeping with its orientation, adopts a risk management approach to climate change. It seeks to show the specific anticipated effects of unattended risks on the economic wellbeing of eight distinct geographic regions that together make up the whole of the United States. Some regions in certain sectors will actually gain from climate change, while others lose, with the conclusion that the losses will far outweigh the gains. The report summarizes its outlook as follows: “The signature effects of human-induced climate change..all have specific, measureable impacts on our nation’s current assets and ongoing economic activity.” (p.2). In effect, these impacts are not mere speculation, but are the reliable results of risk analysis that should be taken into account in business planning. The essential lesson to be learned is that “..if we act aggressively to both adapt to the dangers and to mitigate future impacts by reducing carbon emissions—we can significantly reduce our exposure to the worst risks from climate change and also demonstrate global leadership on climate.” (p.3) This sole reference to the ‘global’ sensibly presupposes that if the United States gets its national house in order it will regain its authority to exercise leadership in global settings. The positive prospect of climate change adjustment is set off against a criticism of present complacency: “Our key findings underscore the reality that if we stay on our current emissions path, our climate risks will multiply and accumulate at the decades tick by.” (p.8) All of this induces the following conclusion: “With this report, we call on the American business community to rise to the challenge and lead the way in helping to reduce climate risks.” (p.9)

The auspices of Risky Business immediately gave the report a media salience and respectful reception that earlier more authoritative scientific studies along the same lines did not receive, including the well-grounded comprehensive reports of the United Nations Inter-governmental Panel on Climate Change (IPCC). Even the Wall Street Journal, the media headquarters for climate change cynics, took note of Risky Business without recourse to its usual snide anti-environmental commentary. The report is arousing great interest by offering what amounts to a Wall Street certification for a counter-branding of climate change. It is a vivid alternative to the climate denial prescriptions being peddled by Koch Brothers/Tea Party/fossil fuel industry anti-environmentalism. By arguing that the failure to act now on climate change will in the future exact bigger and bigger costs on business as well as be harmful to society, the report overrides the contentions that regulating greenhouse gas emissions in the United States is unnecessary and if undertaken will put its manufacturing operations at a competitive disadvantage internationally. Risky Business asserts an opposite position on the facts and their implications for government. Rather than leaving the private sector alone to sort out its own course of action, the report declares that it is in the interest of business to have the government set “a consistent policy and a regulatory framework” that will allow for orderly planning.

Risky Business anticipates annual costs to the country of several billions arising from increasing heat, storm surges, and hurricane intensity, as well as projecting 10% reduced crop yields over and a 3-5% livestock production decline over the course of the next 25 years. The approach adopted is congenial to the hedge fund and shareholder mentality by stressing risk management as the prescribed pattern of response rather than urging taxes or market constriants. In this spirit, attention is given to such an undertaking as the Ceres’ Investor Network on Climate Risk (INCR), and indications that already as many as 53 of the Fortune 100 companies have on their own adopted policies responsive to climate with an aggregate saving $1.1 billion annually, while reducing carbon dioxide emissions by 58.3 million metric tons (an amount equal to closing 15 coal-fired plants). In effect, smart business practices are already taking advantage of carbon-lite methods of production, although the scale is far too small and without overall direction provided by the government. This decentralized approach to the use of energy represents as indirect way of addressing carbon emissions that is seen as the essential feature of this self-management climate risk paradigm, and suggests that big business despite the clamor in Congress is being quietly and effectively enlisted in the battle against global warming. Whether this turn will be on a large enough scale without more centralized regulation is certainly an important issue to resolve, and Risky Business leaves little doubt as to its view that a more self-conscious approach needs to be centrally implemented. As matters currently stand, the benefits of this risk management approach seem quite marginal to the kind of public mobilization that will be needed, and this is precisely where Risky Business seeks to make its views felt among the constituencies that count.

The substantive challenge for the economy is clear: Given seemingly inevitable economic costs, how can such burdens be best addressed to lessen their harmful effects on business and finance. The central message of hope issued by Risky Business is that jobs can be generated (not lost) and GNP increased (not diminished) while at the same time doing what is needed to reduce carbon emissions by a sufficient amount to contain global warming within safe and prudent limits. Further, that all this can be done without requiring a carbon tax provided appropriate action is taken on a large enough scale in the very near future. This risk management approach is not just wishing global warming away while carrying on without any big adjustments. The report while avoiding policy recommendations does offer some prescriptive ideas about how to beat global warming without directly regulating carbon emissions. Among the ideas endorsed are taking such steps as investing heavily in clean public transport systems, enhanced energy efficiency in industry, and increased energy efficiency in building design and operation. These kinds of initiatives are all within the scope of what has come to be called ‘smart development,’ which is becoming the new fashion for demonstrations about how to make economic growth compatible with environmental sustainability, and doing so in ways that do not scare off the neoliberal elites that run the economies of the world.

The main arguments of Risky Business are complemented by a recent World Bank study with the relevant title, “Climate-Smart Development: Adding Up the Benefits of Actions that Help Build Prosperity, End Poverty, and Combat Climate Change.” The study puts forward the new enlightenment oriented claim that the intelligent application of reason enables society to have it all without disturbing the ideological status quo—nurture growth, eliminate poverty, deal with climate change. If the world acts intelligently, there is nothing to worry about. Best of all, this kind of new thinking does not require any major ideological modifications in the capitalist worldview. It does call for an abandonment of what is referred to as “the tyranny of short-termism,” presupposing shareholder acceptance of longer-term planning that may have some negative impacts on quarterly earning statements that have so far stymied most efforts to deal prudently with climate change risks. This kind of shift can be fully rationalized within the risk management paradigm, optimally adjusting business for profit to the new realities of global warming by adopting a new concept of ‘corporate time’ by which to maximize profit-making activity.

There are some further elements in this more hopeful approach to the climate change challenge. The development of huge natural gas deposits supposedly reduces by as much as 50% the release of greenhouse gasses. More importantly, a policy focus on cutting the emissions of what are called ‘short-lived climate pollutants’ (‘black carbon’- diesel fumes, cooking fires, methane, ozone, some hydrofluoride carbons) if implemented effectively is capable of lengthening the time available to make the more fundamental adjustments in the management of energy sources associated with the buildup of carbon dioxide in the atmosphere, including the expansion of reliance on low-carbon production technology and the expansion of renewable energy (solar, wind).

It does seem that Risky Business represents a kind of breakthrough in the national debate on climate change. It aligns business with science and reason without projecting a future scenario of economic decline. It advocates sub-national understandings of the risks and responses based on geographic region, which fits the remedy to the challenge in a more convincing manner. Indirectly, it posits an alternative both to the business funding of climate denial and to those who insist that the structures of national sovereignty and capitalism are incapable of dealing with the global challenges being posed by climate change. This more optimistic approach rests on the assumption that the risks are accurately measureable, and can be offset without incurring great costs if action is quickly undertaken both by the private sector acting on its own and by government acting to protect the national public good.

There are several reasons to be doubtful about whether Risky Business is providing the country with a reliable roadmap. First of all, the failure to relate national policy to the global setting is a significant shortcoming with respect to assessing risks and costs. The level of global warming is dependent on what others do as well as to what happens in the United States. If emissions are reduced globally in accord with scientific understanding, the anticipated national costs and risks will be far lower than if this understanding continues to be ignored, and the problems of adjustment less difficult. Also, it seems doubtful that rational argument alone can sway the fossil fuel establishment to stop muddying the waters of democratic deliberation by continuing to fund the climate denial lobby. Risky Business completely ignores the potential roles of civil society in mobilizing a prudent and equitable response, and contains no consideration of how to distribute whatever burdens are present in a manner that accords with ‘climate justice.’ In the end, it is questionable nationally and internationally, whether a business-friendly win/win scenario for meeting the challenges of climate change can on its own save the planet from impending disaster. Nevertheless, Risky Business is helpful in forging a national consensus, also being urged by President Obama, that rests on an acceptance of the understanding by 97% of climate scientists of the realities of human-induced global warming. What we do know in a capitalist society is that when business raises its voice the public is made to listen, but we also should know that this voice is not to be trusted withoutthe most careful scrutiny.

With this move from the top echelons of the business world, it is time for civil society to come forth with a response that does emphasize the global setting of national policy responses on climate change and seeks to inject the perspectives of the climate justice transnational movement into the policy debate. Part of this response also needs to consider such structural issues as the persisting dominance of sovereign states in the making of global policy relating to climate change, and the questionable capacity of neoliberal globalization to serve the human interest, including that of safeguarding the future.

What seems hopeful is the growing public recognition of climate change as mounting a challenge to society and government that cannot be evaded without experiencing mounting harm. Also encouraging, is the emerging of thinking about indirect and innovative steps that can be taken to improve prospects of reducing carbon emissions—encouraging public transport, systemic moves to increase energy efficiency in building and maintenance, and reductions in air pollution from short-lived pollutants (differing from carbon dioxide with its greenhouse effect lasting for thousands of years).

Richard Falk

Richard Falk is an international law and international relations scholar who taught at Princeton University for forty years. Since 2002 he has lived in Santa Barbara, California, and taught at the local campus of the University of California in Global and International Studies and since 2005 chaired the Board of the Nuclear Age Peace Foundation. He initiated this blog partly in celebration of his 80th birthday.